Why Intellectual Property Is Profitable

As part of our ongoing series examining the ecosystem necessary to bring technology to market, we asked David French, a senior Canadian patent attorney with 35 years of experience, to discuss the importance to a company of protecting its IP and how creating the position of “IP Coordinator” can facilitate the process. This is the first of David’s commentaries and we welcome your comments.

The theme of this series is getting technology to market. This is an honorable objective. Indeed, I would like to present why intellectual property is a key part of the business case for getting technology to market. And doing it right.

Intellectual property such as patents, copyright, trademarks, designs and corporate secrets, all have an important place in the modern business enterprise. Entrepreneurs who are founding a business based on a new product invariably see the patent right as key. Angels and venture capitalists look for the comfort of patent protection when considering whether to make an investment. But even in the absence of a new patentable concept, every business has to address choosing a trademark under which it will be known. So you have to get at least a little bit wet in the IP birdbath.

Copyrights cannot be neglected. When you commission an artist to design a logo for use as a trademark, are you going to take care to get an assignment of the copyright in that logo? You may want to assert that copyright yourself someday against another company that is imitating the logo. This is a supplementary right to a trademark right, but having the ability to enforce the copyright in a logo can be very powerful.

If you’re going to take an assignment of copyright, then be sure to get a release of “moral rights” from the artist. What are moral rights? It’s the right of the artist to object when you modify the logo in a way that is injurious to their reputation. If you didn’t get such a waiver, don’t be surprised when you modify your logo to receive in the mail an objection from the artist that he is offended by the change. Your new logo may or may not be injurious to his reputation, but he’s threatening you with legal proceedings. It would have been so simple to prevent this situation by obtaining a waiver of moral rights at the beginning when you commissioned the design of your new logo.

Another example is obtaining an industrial design registration. When Procter & Gamble introduced Head & Shoulders anti-dandruff shampoo, it adopted a bottle with a long neck with blue and burgundy colouring . It advertised heavily and the product took off. But several months later, a competing lower-priced dandruff shampoo appeared on the market. How was it packaged? In a bottle with a long neck and blue and burgundy colouring. Procter & Gamble managed to make the competitor change its colouring , but the bottle shape remained. P&G had neglected to obtain an industrial design on this heavily advertised, uniquely shaped bottle format. That was a serious oversight.

These are just a couple examples from the fields of copyright and designs. Court registries around the world are full of cases based on these two classes of intellectual property, as well as cases based on patents, trademarks, breach of confidentiality obligations and trade secrets. It’s a big business. A lot of money is at stake; profits are higher when you can charge customers prices that are not subject to competition from very similar or imitative products. That is why it’s profitable to invest in intellectual property. But it has to be done correctly.

In my next post, I will talk about the importance to any startup of having an IP coordinator on the team and how this role fits into the organisation.

David French is the principal and CEO of Second Counsel Services, which provides guidance for companies that wish to improve their management of Intellectual Property. For more information visit www.SecondCounsel.com.